The road to a debt-free financially strong you is a tedious and winding one but you must remember the reason you entered into the commitment of the debt review process. The aim is to drastically reduce or eliminate your debt.
It would be silly to assume that you would not require some form of financial assistance while under debt review, because well, life happens and as much as we wish to prepare for the unexpected, we cannot always do so.
Do you now find yourself in the situation where you need a car? As you may know, the debt review process prevents you from applying for additional credit, a safety measure put in place to help you on your path to reduce your debt, save and protect you from incurring further debt.
Fret not, there are alternatives. Let’s explore the options available to you.
Yes, you can buy a car while under debt review. Although access to traditional car financing options may be limited as a consequence of the credit-freeze associated with the debt review status, other options such as rent-to-own agreements, and buying from private sellers remain accessible.
Here’s a full list of alternative options:
Let’s explore the possibilities further.
A rent-to-own (or rent-to-buy) is a long-term rental and not a credit agreement. The agreement is month to month and there is an understanding that there is a possibility of you purchasing the car in the future. As this is a rental and not a credit agreement, you do not incur debt nor do you need to apply for credit.
Using this type of agreement to buy a car is new to South Africa and gives hope to people who are working hard to get out from under their debt while being financially responsible.
Some serious advantages to renting with the intention to buy are:
Bonus: It can help to improve credit score ratings, if repaid responsibly.
One man’s junk is another man’s treasure.
The debt review process is great in that it puts some extra money in your pocket at the end of the month, cash that you can be saving for your car.
You can find amazing deals on a multitude of platforms, eg Gumtree, for quality used cars being sold for cash by private sellers.These sites are credible and users/ sellers have to be verified before they can sell on the platform. So you have peace of mind when using the platform.
If your car needs are short term, car rental is a good option to consider. There are some amazing deals with daily rates that suit any budget.
Here is a comparison of the best and worst car rental companies in SA.
Keep in mind that since this is a short-term rental, there is no chance of owning the vehicle at the end of the rental term, unlike with the longer-term rent-to-own agreements that we mentioned earlier.
Bear in mind that you will need a deposit when you rent a car.
Two wheels are cheaper than four. If you can’t afford to buy a car without car financing right now, then consider opting for a motorcycle or a bicycle instead.
Both options are more affordable than buying a car and can still get you where you need to go.
Plus, you’ll save money on fuel.
Consider carpooling. This option is budget friendly and helps you and the car owner to travel more economically. The cost of fuel can be split and Carpool Karaoke is lots of fun!
Did you know that Uber launched UberGo in South Africa last year? UberGo is a more affordable way to Uber. Ideal for getting to work, school, or the shop.
It’s cashless, convenient and safe. With the exorbitant cost of fuel, sometimes an uber is a more viable means of travel.
Try taking the bus, train, or a taxi to get to where you need to go (especially if it is a longer trip). Public transport in South Africa has improved a lot in recent years, and thousands of people rely on public transport to get around.
You can apply for car financing immediately after you complete the debt review process.
As soon as you get your Clearance Certificate, you will be able to access credit and incur new debt. However, most experts recommend that you wait a month before checking if your debt review status is up-to-date. This allows creditors to update your profile. Once you are in the clear, you can proceed with your application for car finance.
Here’s a complete guide on applying for credit after debt review, check it out.
It is important that your profile shows that you are no longer under debt review when you apply for your car finance.
Pro tip: Wait as long as you can and build up a strong credit score, so that you qualify for lower interest rates.
Taking care of your existing debt is more important than incurring additional debt to finance a car. Making short-term sacrifices to become debt-free will have a greater impact on your life. If you are thinking about buying a car while under debt review, or are considering debt review, but you’re afraid that it might hold you back, consider the alternative options shared in this blog, and try to wait.
As with everything, do the research. Armed with the information, make decisions based on which options suit your lifestyle and budget most. Vroom Vroom to you.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.